Call center cuts about 25 jobs after WorldCom debacle

For the company that has generated billions from telecommunications services, it's time to talk. WorldCom, operating through WorldCom group and MCI group, recently announced profits were overstated by almost $4 billion for 2001 and the first quarter of 2002.

An internal audit of the company's capital expenditure accounting revealed that certain transfers from line cost expenses to capital accounts were not made in accordance with generally accepted accounting principles. After the adjustments, the company showed a net loss for 2001 and the first quarter of 2002, according to a June 25 company release.

WorldCom, which conducts business with more than 60,000 employees in 65 countries and has $35 billion in annualized revenues, is laying off 17,000 employees.

Information provided by WorldCom's Washington, D.C., office indicates the layoffs for Springfield's call center will involve fewer than 25 of its 1,000-plus employees. There will be about 230 jobs lost in Missouri, leaving about 2,200 WorldCom employees in the state.

WorldCom also operates an office for business sales at 300 John Q. Hammons Pkwy. It employs about 15 people.

Sudie Nolan, WorldCom spokesperson, said these cuts were planned weeks ago and are not related to the most recent events at the company. Employees will receive severance pay based on the level and length of their service, she said.

Brent Stanton, the local center's director, was unavailable for comment.

On July 1, WorldCom delivered a sworn statement to the Securities and Exchange Commission containing "a detailed explanation of events ... (regarding) its intent to restate its financial results for 2001 and the first quarter of 2002." This was in response to a March 11 confidential request from the SEC for the "voluntary production of documents and information," according to the company's Web site.

"We filed an enforcement action against them last week in federal court in New York," said Bill Baker, associate director in the division of enforcement at the SEC in Washington, D.C. Baker would not disclose how long WorldCom has been under investigation.

"We charged them with fraud with respect to improper capitalization of certain expenses," Baker said. It was basically a "violation of the anti-fraud provisions of the federal securities laws as well as reporting provisions. We didn't identify any individual in the complaint; we said senior management was involved."

In a June 28 letter to President Bush, WorldCom's current president and chief executive officer, John Sidgmore, shared the president's "outrage and concern about past accounting irregularities at WorldCom" and maintained he would be taking "decisive action."

The economic boom of the 1990s may have likely set the stage for the WorldCom debacle.

"The dot-com era set a new precedent on unrealistic earnings expectations," said Vera Gibbons, sales manager for Sprint in Springfield.

"Once corporations began to apply creative accounting practices, it was quickly realized that it was easier, and far more profitable, to increase stock value than to make a product or to provide a service."

WorldCom's woes have driven its stock into the basement. Its 52-week range has wandered between $16.06 and a nickel, said Dan Malachowski, financial planner at Baron Financial Services. He cited the stock's 1999 glory days when it topped $60 a share. The stock was at 6 cents on July 2.

In an effort to increase firms' financial responsibility, the SEC published June 28 a list of 945 companies whose officers are ordered to certify accuracy and completeness of recent reports.

The list, which applies to SEC-registered companies with reported annual revenues in excess of $1.2 billion, is designed to get chief executives and company financial officers to sware under oath and for publication that their most recent financial reports are both complete and accurate.

The list of affected companies is available at the SEC's Web site at www.sec.gov.